Getting Housing Into A Tight Jam During 2018

This is my first Housing Note of 2018. Yay me! There is something uplifting and optimistic and about starting off a new year, although the impact of the new tax law of December 22, 2017, challenges my ongoing naivete. While the new law has the potential to put the housing market in a jam as the federal government pulls its century-old endorsement through deductions, this is how you get out of one:

Clearly it is more fun to avoid getting into a jam by turning around.

So let’s look at empirical data on how the Manhattan market reacted to the uncertainty that permeated the housing zeitgeist in the fall of 2017 as both houses of Congress worked on the new tax law.

Market Report Gauntlet Q4 2017 Week 1: Manhattan Sales

Since it is the beginning of 2018, we need to close out the 2017 housing market. In the coming weeks, I’ll recap the results of the 4Q 2017 for the entire Elliman Report Series that I have been authoring for Douglas Elliman since 1994.

Here is some empirical evidence that Wall Street is very curious about the implications of the new tax law. The coverage of our Elliman market report for Manhattan Sales Q4 2017 was the number 1 most read article first thing in the morning and maintained #1 “most read” and number 1 “most emailed” status for the entire trading day (350,000 subscribers worldwide). I’m even going to go into discussions of my alma mater’s #1 men’s college hoop rating this week.

And some chart love (it strayed from the purple or gold color theme but given the article’s #1 status for a full day, black and white are clearly ok).

Here were some of my takeaways for the Q4 2017 Elliman Report: Manhattan Sales:

  • First time in 7 quarters the average sales price fell below $2 million as the legacy contract pipeline clears
  • Median sales price edged higher for third consecutive quarter, driven by re-sales
  • Sales activity for the Manhattan housing market was at the lowest fourth quarter total in six years
  • Pace of the fall market cooled as market participants awaited the housing-related terms of the new federal tax law
  • Buyers continued to hold firm, forcing sellers to meet them on price
  • Smaller apartments continued to see more bidding wars than larger apartments
  • 90% of sales at or above $5 million were “all cash”

I have provided a sampling of Manhattan-centric charts below that can also be found in our online Manhattan chart gallery.

Tax Law Insight On Twitter

Click on my retweet of Nick’s tweet for a fascinating thread.

Brick Underground Podcast January 2, 2018 – Jonathan Miller

Over at Matrix Blog

Just before the holidays, I got to join Alanna Schubach and Nathan Tomey on their Brick Underground podcast to talk about 2018.

This podcast will always have a special meaning to me as our late friend Jhoanna Robledo‘s passion project.

The Brick Underground Podcast: Talking 2018 with NYC real estate appraiser Jonathan Miller.

Click on the graphic below to listen to 30 minutes of Brick talk.

2017: The Year The 2015 Manhattan Market Shift Became Conventional Wisdom

Over at Matrix Blog

This was my favorite blog post title in years.

After controlling the Manhattan housing market for quite a while, sellers and landlords exchanged roles with buyers and tenants circa 2015.

After peaking in 3Q 2015, the market share of bidding wars fell by two thirds. Bidding wars remain more common at lower price points. After bottoming in the 3Q 2015, the market share of rentals with landlord concessions has expanded sharply due to high-end rental development over-building. But like the sales market, the oversupply remains at the upper end.


Sunday, December 31, 2017, was a trifecta of my New York Times Real Estate market insight goodness before the year ended:

Landlords and Sellers Adjust [New York Times: Calculator column]

Manhattan Prices Stable in 2017, Even as Luxury Takes a Breather [New York Times: Big Ticket column]

Ditching the Tub [New York Times]

New Manhattan Condos Got Really Big Over The Past Three Years

Over at Matrix Blog

Average sales size patterns for these two size sales categories split sharply three years ago.

[Click to expand]

Upcoming Speaking Events

January 24, 2018 – REI Breakfast Series – RESA Presents: Tax Reform’s Impact on the Real Estate Market. Fordham Law School (Lincoln Ctr). More details to come.


Happy New Year to readers of Appraiserville – wishing you a prosperous 2018. The 2017 appraisal year was a sea-change of events that gave many appraisers hope that sanity would return to our world. It was the first year of upside in probably a decade so we’ll gladly take it. I’ve just gone through the busiest year end of my career (it’s not over!) so I have a backlog of writings to share soon on Real Estate Industrial Complex. I just renewed the domain so this industry repository won’t be sitting dormant for long.

Looking back at the appraisal industry in 2017:

  • Appraisers became significantly more outspoken and legislatively active.
  • Longstanding chronic problems with the Appraisal Institute leadership and their disdain for residential appraisers was finally discussed openly.
  • A massive industry pushback of Appraisal Institute’s planned “taking” of most chapter funds was delayed (originally January 1, 2018).
  • The state coalitions expanded and continued to be more effective in their influence of policy.
  • Our industry learned that state level policy influence is effective thanks to the coalitions getting the word out.
  • A great sense of community working for a common cause (survival) has blossomed.
  • The AMC grip on our industry formed cracks after the misleading “appraisal shortage” narrative was crushed by our providing enlightened economic facts.

Just say NO

On a personal note, multiple Wall Street and other large financial institutions have approached my firm this year after they neutered their AMC vendors, requiring that they use our firm for high-end work. We are to be paid our fee and allowed to provide our reasonable turn times. I was told many horror stories by those institutions who came to realize we are not robots, nor are we widgets. By taking this step, they invested in risk management.

However, their initial stream of new business was met with 3-4 addendum requests per assignment that had nothing to do with any requirements, repeated prior requests or had no relationship to the credibility of the value. We nicely complained to the AMC and their institutional clients as to why this was a problem for us, indicating the relationship won’t work unless this is fixed – the idea that we are not to be treated as if we have no experience in our market. To their credit, they escalated the issues and responded with the utmost professionalism. Suddenly all those requests for clarifications stopped coming, but the new assignments didn’t stop. Win-win. We have one last new Wall Street client who is resolving their internal issues now and I am hopeful that they will make the necessary corrections. If they don’t, we’ll simply drop them.

I do understand the default thinking behind superfluous addenda requests – Typically, AMCs are forced to rely on appraisers with no local market knowledge because most of the better local talent has other clients paying full fees and demanding reasonable turn times. As a result, AMCs often lose their muscle memory to engage critical thinking in their reviews. The idea that my high-end Manhattan property appraisal can be reviewed by an appraiser in Kansas who has never been here, for a California bank and the AMC engages in scary big worded USPAP talk that isn’t accurate is completely inappropriate. I’m not saying pushback always works but AMCs seem to be recognizing that their time is up for business as usual and are bringing outsiders with actual valuation experience to fix what’s broken – at least in my small window of AMC interactions.

Life is too short. Don’t put up with what isn’t right. That’s how the appraisal industry killed the “appraisal shortage” lie in 2017. Do the best appraisal you can, operate with professionalism and integrity and know when to say “no.” After what happened in 2017, I think the few AMC clients we are engaged with are seeing a little bit of this light.

Dave Towne: Revision to GSE forms coming?

Most of my reports are narrative these days (unless you know of a form to appraise a “dumb-waiter airshaft.”)

But here’s something from Dave Towne (send him a note and get on his essential mailing list).

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll get out of that parking space without hitting your bumper;
  • You’ll watch old episodes of the Rockford Files and master a j-brake maneuver;
  • And I’ll buy a new snow plow.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

One more thing – Me in 40 years:

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

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